US CPI data is due out this week with expectations that Core CPI grew 4.7% over the year, down from 4.8% of the previous month. The US Treasury Department will auction off 3-year, 10-year, and 30-year bonds this week as they look to raise funds in the bond market.
Chinese imports contracted by 12.4%, missing forecasts of a 5% fall, while exports also missed forecasts, coming out at 14.5% against forecasts of 12.5%.
Germany, the largest economy in the EU, will be releasing CPI data which will have an impact on the Euro.
Check out the calendar below to see what economic data is due this week.
Bitcoin has been consolidating for nearly 2 months, trading sideways near the $30,000 level.
There is a sharp upward trend which has been followed for the majority of the year. It is likely for this line to be hit before we see major bullish moves.
The digital asset is lining up a move into the next range between $32,000 and $37,000 as the next stage of the 2023 bull run.
RSI is oversold and we may see momentum to the upside as RSI pushes up towards a 70 reading on the daily chart.
Gold has started the week bearish, opening Monday’s trading at $1942 and now hovering around the $1930 support area. Last week, we saw a mixed jobs report with low nonfarm payrolls and higher-than-forecast earnings.
Price action in Gold seems to be more correlated with bond yields over the past week and the downgrade to the US credit rating led to higher bond yields. This increases the opportunity cost of holding the precious metal, lowering its value.
CPI data will be released this week and investors should keep an eye out for the Core reading as the data-reliant Fed focuses on this as an indicator for inflation. A lower reading will lower projections of a September rate hike.
US 10-year Bond Yield
US bonds have come into focus with the US credit rating downgrade, which resulted in a selloff in bonds and yields rising to 2023 highs. The increase in the US bond yields also boosted the Dollar as they share a direct correlation.
This week, the US Treasury will be auctioning off 3-year, 10-year, and 30-year bonds which amount to just over $100bn. Theoretically, this should discount the price of the bonds, and yields should increase further.
Traders should be wary of how this may impact currency and commodity prices.
The Dollar Index
The Dollar started the week off bullish as it approached the resistance at $103. Price action is currently trading at the 50-day EMA.
The Dollar has seen some bullish movement over the past few weeks, supported by stocks reporting earnings that outperformed expectations from Wall St. Inflation data has been cooling off yet Jerome Powell did leave the door open for a September rate hike which sent mixed signals to traders.
CPI data coming out this week will give more clarity as to whether or not we shall see the rate hike in September.
Crypto products are unregulated and could be highly volatile. Please be aware of the risks before investing.
DIFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee, or implication by DIFX that the forecast information will eventuate, that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses in particular if the conditions or assumptions used for the forecast or mentioned in the analysis do not eventuate as anticipated and the forecast is not realized.